Beyond the Aggregate Score: The Differential Impact of Governance Pillars on Financial Performance

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🔬研究者:Provides empirical evidence that governance pillars have differential impacts across regions, challenging the universal application of aggregate governance scores.

🏢実務担当者:Corporate governance teams should consider region-specific contexts when designing governance structures, rather than relying solely on overall scores.

🏛政策担当者:Regulators should avoid one-size-fits-all governance mandates and consider local institutional factors.

Background The 2021–2024 economic turbulence exposed vulnerabilities in corporate oversight, as many firms faced financial distress despite high governance ratings. These failures highlight the flaw of overrelying on aggregate governance scores, which induce a ‘masking effect’ where strong pillars conceal severe deficiencies in others. Furthermore, prior literature often promotes a ‘one-size-fits-all’ paradigm, ignoring institutional contexts. This study unbundles corporate governance into four functional pillars to evaluate their distinct, region-specific impacts on financial performance. Methods Using 14,776 firm-year observations from non-financial listed firms across 53 countries (2020–2024), we integrate data from MSCI, OSIRIS, and the World Bank. We employ panel regression analysis with year, industry, and country fixed effects to evaluate the four pillars’ impacts on ROA. To capture institutional heterogeneity, the baseline model is extended through region-specific regressions across Africa, the Americas, Asia, Europe, and Oceania. Results We find that accounting, executive pay, and ownership governance are positively associated with ROA, whereas formal board governance correlates negatively. These findings remain robust after addressing selection bias via Coarsened Exact Matching (CEM). Regional analyses reveal a striking asymmetry: accounting governance is a universal profitability driver across all regions. Conversely, the effectiveness of executive pay, ownership, and board structures is highly heterogeneous, depending heavily on local institutional conditions. Conclusions Governance influences performance through distinct channels, challenging the global ‘one-size-fits-all’ paradigm. While accounting governance universally enhances performance, board, compensation, and ownership mechanisms must be tailored to local institutional contexts. Stakeholders must move beyond superficial aggregate scores and prioritise context-sensitive reforms to ensure firm resilience.

• semanticscholar https://f1000research.com/articles/15-1162/pdffirst seen 2026-07-18 08:27:19